BBC News | Business | Egg acts over ‘risky’ customers

From the title of the article, you think they are canning customers who aren’t paying their bills/maxing out their cards. That is also what the bank’s PR people are telling the media. However, as you read on, it looks like quite a few of the people who got a cancellation letter have excellent credit history - and pay their balance off every month. This means that the bank doesn’t earn interest on their accounts - which could have prompted the cancellations.

This is a bit of an interesting dilemma.  I’ve never carried a balance on a credit card in my entire life and I don’t intend to. My parents and a lot of PF bloggers do the same thing. However, one must ask themselves - is the bank within its rights to do this and is it a smart business practice? Personally, I feel that the issuers have the right to set the rules on who they give credit to. If you don’t like the policies, switch to a new card - vote with your dollars, if you will.

On the other hand, however, I feel that in the long run this type of policy will not foster much good will. The banks should try and focus on fostering positive brand image while engaging in relationship marketing/cross selling of other financial services. If someone is pleased with their Citi Mastercard, they might be more likely to be receptive to a pitch for a car loan or mortgage. I didn’t major in marketing in college, but it just seems like rather than alienate those customers, the bank could have handled the situation in a way that could result in increased brand loyalty and left the door open for new revenue streams from those cardholders.

What do you think? Feel free to leave comments with your thoughts!

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